Agenda - 03-19-2019 6-a - Approval of a Financial Assistance Award to Community Home Trust for the Landings at Winmore Apartment Complex

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2 o An AHP $550,000 Second Loan originated by Bank of America with a 7% interest rate and matures in December 2030. o An NC Housing Finance Agency (NCHFA) $4,995,112 loan, provided in lieu of tax credits with no interest and no payments required. The note matures in December 2025. If the property remains in compliance until that time, the note will be forgiven. o An NCHFA $332,997 Loan that matures in February 2040. The note bears no interest. o A United Housing Associates $250,000 Loan that is now assigned to Bank of America. This loan matures in December 2030 and the note bears no interest. ■ Community Home Trust (CHT) hired Partnership Property Management (PPM) as the property management company in January 2018. ■ When CHT acquired the property in 2017, the Operating Reserve was $81,938 and the Replacement Reserve was $85,352. ■ The expenses incurred that were paid from the reserves since CHT's ownership include the following: o $22,896.90 of operating reserves for property insurance in October 2018 o $9,743.66 of operating reserves to pay for a variety of normal maintenance activities, i.e. pressure washing and apartment turnover costs. o $17,794.69 of replacement reserves for miscellaneous replacements, i.e. appliances and sprinkler heads. o All transfers from both reserves were approved by the NC Housing Finance Agency (NCHFA). ■ CHT cites three (3) factors that caused the challenges being confronted. Those factors are: o The property lost money in 2015, 2016, 2017 and 2018. o Six (6) apartments were vacant when they acquired the property and vacancies remained high for most of 2018. However, by December 2018, there were only three (3) vacancies. o Some apartments, especially two (2), were very expensive to turnover and rent. ■ Based on an application from CHT, the Orange County Housing and Community Development Department provided $3,500 in Risk Mitigation funds in late January/early February 2019 for one of the aforementioned units. ■ The Town of Carrboro recently provided $30,000 of a $50,000 request. CHT will submit another request this spring for the remaining $20,000 needed. ■ The property management company, PPM, has worked hard to address the causes of the losses, i.e. reducing the vacancies and holding tenants accountable to their leases. The financial performance of the property was turning around at the end of 2018. As of today, there are only two (2) vacancies and the rental income is more stable. FINANCIAL IMPACT: A financial impact is anticipated. The requested monetary assistance, if approved, would be taken from the County's Risk Mitigation and Housing Displacement Fund. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status.